STMicroelectronics (STM), a leading chipmaker supplying companies like Tesla and Apple, has slashed its full-year revenue and profit forecasts for the second time. The company attributed the revision to a “longer and more pronounced correction in industrial” than anticipated, citing a weakening global demand and inventory adjustments.
This news sent shockwaves through the market, with STM shares plummeting 13.5%, hitting their worst day in over four years. The cut is “slightly worse than feared,” according to analysts, who are concerned about the possibility of a prolonged downturn.
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STMicroelectronics now expects revenue of $13.2-$13.7 billion for 2024, down from a previous forecast of $14-$15 billion. Margins are also expected to be lower, around 40% compared to the previous forecast of “low 40s.”
The company’s reliance on the industrial and automotive sectors leaves it vulnerable to economic fluctuations. While the company still expects EVs to drive growth in the second half of the year, particularly in China, the pace of growth in Europe has slowed down.
The revised outlook reflects the challenging market conditions for semiconductor manufacturers. Analysts are wondering if the company will be able to recover soon or if a deeper correction is on the horizon.